Pertamina recently announced it would restructure dozens of subsidiaries into five subholdings for upstream, refining, power, gas and trade to improve efficiency. Gas subholding PGN is already listed on the Indonesian Stock Exchange (IDX).

The company is looking to make its upstream subholding, Pertamina EP, the next subsidiary to conduct an initial public offering (IPO), hinted Pertamina president director Nicke Widywati during a webinar hosted by Rakyat Merdeka newspaper on June 15.

“The shareholders’ aim is not privatization. This is not letting go of Pertamina’s shares but conducting an IPO of Pertamina’s subsidiaries,” she told lawmakers in Jakarta on June 22.

Furthermore, she pointed out that, as per the 2001 Oil and Gas Law, all oil and gas fields in Indonesia belong to the state and not any particular company, including Pertamina.

State-Owned Enterprises Minister Erick Thohir first announced the IPO plan on June 12 following a shareholders meeting between the ministry and the oil company.

“In the next two years, we expect Pertamina’s Bu Nicke to take one or two subholdings public in order to become more transparent and accountable,” he said.

Going public will, for instance, require Pertamina to publish quarterly financial reports one month after each quarter ends, according to current regulations. The company has yet to publish its first quarter financial report this year.

However, the IPO plan has been met with resistance by the company’s inhouse trade unions, the Federation of Pertamina United Labor Unions (FSPPB) and the Pertamina EP Trade Union (SPPEP).

“State control is still very much needed to protect Pertamina from the oil and gas mafia that is rampant in the free market,” stated the FSPPB in a petition, which had 14,900 signatures as of Tuesday.

The FSPPB previously rejected the formation of gas subholding PGN and the appointment of former Jakarta governor Basuki Tjahaja Purnama as Pertamina commissioner.

Meanwhile, SPPEP chairman Tata Musthafa said on June 18 that Pertamina EP’s union opposed the IPO plan “to safeguard Pertamina for the people’s welfare as stipulated by Article 33 of the 1945 Constitution.”

Article 33 says that Indonesia’s natural resources must be controlled by the state. It does not, however, forbid IPOs, which have been conducted by many other national extractive companies such as PGN, coal miner PT Bukit Asam and tin miner PT Timah.

The SPPEP also argued that an IPO might reduce non-tax state revenue from the oil and gas industry. Official data show the industry contributed Rp 115.1 trillion (US$8.13 billion) to state coffers last year, the largest contribution from among the energy sector.

“We demand the company provide an explanation about PT Pertamina EP’s strategy in maintaining its company performance after the implementation of the holdings and subholdings,” Tata said.